00:01
So here we're talking about asset pricing, and we have this stock that's too low.
00:04
And we have these four concepts that we need to evaluate.
00:07
One, the january effect.
00:12
Well, this one you can obviously rule out, right? we are given no information about the month.
00:20
And in general, this seems to be a persistent state of affairs, right? it seems like the price of the stock has remained low for some time.
00:28
It's not adjusting.
00:29
So we have no information in the question whatsoever about january, so there's no way this is possible in january effect.
00:36
B, is it a neglected firm? that one is less easy to rule out.
00:43
C, is it a price earnings effect? or is it d a reversal effect? well, reversal effect is also very easy to rule out, right? the price is always low.
01:02
There is no reversal here, right? there is, you know, we have no information about, about any reversal, right? all we know is that this stock price is stagnant.
01:16
So there's no evidence here whatsoever of a reversal.
01:19
So i can rule out a and d very easily.
01:22
The next thing we need to know is some definitions.
01:24
The price earnings effect says, however, right, and this is related because the price of the firm stock is low relative to its value...